Universal Television Group, Turner Entertainment Group and Discovery Networks U.S. have now concluded their 2003-04 cable upfronts, emerging above the fray that's roiled marketplace negotiations during most of this month.
Yet a number of buyers and sellers remain at loggerheads. The ad community's hard-nosed bargaining is aimed at blunting further cost-per-thousand increases, while some in network circles remain just as adamant about holding their line on prices.
A few networks are even threatening to save more inventory for scatter sales, though Discovery president of ad sales Joe Abruzzese doubted many programmers would take that step.
Another factor complicating the cable upfront was Magna Global USA's late entry into the game. The giant media-buying shop — which was testing its clout, according to network sales executives — had finalized very little cable business into early June.
"Its sheer size demands respect," Universal president of ad sales Jeff Lucas said, so the buying firm decided that "timing was not a big factor for them."
Abruzzese said: "Everybody's got their own strategy. It depends on what they're buying." Those buying specific programs might be hurt by delays, while those buying in bulk, like Magna, may not, he said.
As the annual Madison Avenue bazaar winds down, Jack Myers Reports
estimates that cable's upfront volume has topped $5.55 billion, up 20% from the year-ago $4.6 billion.
The industry publication noted that the final upfront count could reach the $5.8 billion to $6 billion range.
'The big stall'
After what one cable executive called "the big stall," the pace seemed to have picked up some steam nearly two weeks ago, although some buyers and sellers continue to lock horns.
Last week's rainy weather might prolong upfront bargaining, another cable executive said. With no incentive to hit the golf links, he said half-jokingly, buyers and sellers would likely continue their haggling.
Trying to explain the buyers' tactics, Universal's Lucas said, "they paid higher than planned" in the broadcast network and TV-syndication upfronts — markets he described as "fast and furious."
Agencies also plunked down big dollars in early negotiations with major cable players.
Then early this month, the agencies decided to "look closer" at which cable networks that have value for their clients and which don't, according to Lucas. Smaller, younger-skewing networks hoping to piggyback on the notion that a robust upfront lifts all boats would face the stiffest buyer opposition, he said.
Hallmark Channel was 85% done with its upfront last Friday, said executive vice president of ad sales Bill Abbott. CPM increases were "in the high single digits, with some low double-digit," he said.
"This upfront has really been a story of three marketplaces," said Abbott, noting that the fully distributed networks went early, while second-tier networks and emerging/targeted networks lagged behind.
Universal was the first cable operation to conclude its 2003-04 upfront business, said Lucas, who noted that the programmer's volume rose by "almost 30%" and its CPM hikes "averaged 11%."
All told, 37 major accounts bought across Universal's networks, with Magna the last major buying entity to wrap its upfront deals, he said.
Turner Entertainment president of sales David Levy said last Thursday Turner was pretty close to wrapping everything it wanted to sell in the upfront.
Declining to get into specific percentages, he said only that Turner Network Television and TBS Superstation notched double-digit CPM and volume increases.
Abruzzese last Thursday said Discovery was almost done. Once final upfront deals closed last Friday, he projected volume would climb 50% to 60%, with CPM increases "probably in the 11% area."
Advertisers have not pulled back, he maintained, except for domestic automakers.
Home-improvement, pharmaceuticals, import autos and packaged-goods clients are among Discovery's strongest gainers, Abruzzese said.
As for packaged goods, Abruzzese said that early on Procter & Gamble Co. renewed a cross-platform deal with Discovery Networks, a reported $70 million pact that was technically not part of the upfront. He hinted that several other cross-media or product-placement deals would be disclosed shortly.
Lucas said the usual suspects bolstered Universal's and cable's upfront business: pharmaceuticals, packaged goods, fast foods, retail and entertainment.
Automotive is mixed, he said, with domestic marketers' spending down and imports' budgets "up slightly." There's a similar dichotomy in entertainment, where he said film studios have boosted budgets for movies in DVD while reducing the number of theatrical releases.
Levy and Abruzzese both expect strong scatter sales ahead Scripps Networks executive vice president Steve Gigliotti — who said Friday its upfront was 70% done — and Abbott foresaw strength in calendar deals too. But Abruzzese said it's "too soon" to talk calendar deals, which he said won't start till October.